Early Look

Wednesday, December 1, 2021

Futures	Up/Down	%	Last
Dow	265.00	0.78%	34,725
S&P 500	51.25	1.12%	4,617
Nasdaq	222.50	1.38%	16,373

 

 

The rollercoaster rise continues this week, with markets waking up to yet more volatility with U.S. futures tracking gains in Asia and Europe, looking to recover after yesterday’s sharp pullback on rising interest rate, virus variant fears. Oil prices are also bouncing back with WTI up over 4.3% above $69 per barrel as OPEC and its allies begin two days of meetings on Wednesday to decide whether to release more oil into the market or restrain supply amid an oil price rout and fears the Omicron coronavirus variant could weaken global energy demand. It was another rough day on Wall Street Tuesday with major averages pulling back a second time in the last three, with the S&P 500, Dow and Russell 2000 closing out the month with negative returns while the Nasdaq Comp eked out a monthly gain amid a rotation into large cap powerhouses like Apple. Energy stocks underperformed as oil prices plunged to 3-month lows below $65 and settled more than 15% lower than Wednesday’s close. The Russell 2000 suffered larger losses than the other indices is now trading more than 10% off its record intraday high from November 8^th. A combination of heightened Covid fears (concerns about vaccines’ effectiveness against the new Omicron variant) along with weaker economic data (consumer confidence at a 9-month low) and Fed Chair Jerome Powell’s comments to the Senate Banking Committee testimony where he said it is time to retire the word “transitory” when describing inflation (note Powell will also appear before the House of Representatives Financial Services Committee on Wednesday). In Asian markets, The Nikkei Index gains 113 points to 27,935, the Shanghai Index gains 13 points to 3,576, and the Hang Seng Index jumps +0.78% or 183 points to 23,658. In Europe, the German DAX is up over 200 points or 1.4% at 15,310, while the FTSE 100 is up 90 points or 1.28% at 7,150. Air travelers to the United States will face tougher COVID-19 testing rules, while more countries tightened their borders amid uncertainty around the virulence of the Omicron variant and its ability to evade vaccine protection. Japan and Hong Kong said they would expand travel curbs

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -88.58 points, or 1.90%, to 4,566.99.

·     The Dow Jones Industrial Average fell -650.17 points, or 1.85%, to 34,485.77.

·     The Nasdaq Composite dipped -245.14 points, or 1.55%, to 15,537.69.

·     The Russell 2000 Index declined -43.07 points, or 0.25% to 2,198.90.

 

Events Calendar for Today

·     7:00 AM ET                 MBA Mortgage Applications Data

·     8:15 AM ET                 ADP Employment Change for November…est. 525K

·     9:45 AM ET                 Markit Manufacturing PMI, Nov-F…est.

·     10:00 AM ET               Construction Spending for October…est. +0.4%

·     10:00 AM ET               ISM Manufacturing PMI, for November…est. 61.0

·     10:30 AM ET               Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BBW, DAKT, DCI, GIII, PDCO, REX

·     Earnings After the Close: AI, CRWD, CULP, ESTC, FIVE, NCNO, OKTA, PVH, SMTC, SNOW, SNPS, SPLK, VEEV, ZUO

 

Other Key Events:

·     Canaccord 2021 Digital Gaming Summit (virtual), 11/30-12/1

·     Cowen 4th Annual Cannabis Virtual Conference (virtual), 11/29-12/1

·     Cowen 2021 Energy Summit (virtual), 12/1-12/3

·     Credit Suisse 25th Annual Technology, Media & Telecom Conference, 11/29-12/2, in Arizona

·     Credit Suisse 9th Annual Industrials Conference, 12/1-12/3, in Florida

·     Evercore/ISI 4th Annual HealthCONx Conference, 11/30-12/2, in Boston

·     KeyBanc Enterprise Tech Leadership Series & Mosaic Summit (virtual), 11/29-12/1

·     Morgan Stanley Nasdaq Investor Conference (virtual), 11/30-12/3

·     Morgan Stanley Global Consumer & Retail Conference (virtual), 11/30-12/2

·     Piper 33rd Annual Healthcare Conference (virtual), 11/29-12/2

·     Stephens Annual Investment Conference, in Nashville, TN, 12/1-12/3

 

 

Macro	Up/Down	Last
Nymex	2.91	69.11
Brent	3.13	72.38
Gold	12.15	1,786.70
EUR/USD	-0.0006	1.133
JPY/USD	0.24	113.37
10-Year Note	+0.053	1.494%

 

 

World News

·     The White House is planning stricter testing requirements for all travelers entering the U.S., including returning U.S. citizens, to hinder the spread of the recently discovered omicron variant of COVID-19, the Washington Post reports. As part of a winter COVID strategy that President Joe Biden intends to unveil later this week, U.S. officials will require everyone entering the country to be tested one day prior to boarding flights, regardless of vaccination status or place of departure, the author says, noting that administration officials are also mulling a requirement that all travelers get retested within three to five days of arrival

 

Sector News Breakdown

Consumer

·     Allbirds (BIRD) Q3 EPS ($0.25) vs est. ($0.12) on revenue $62.7M vs est. $61.9M, qtr-end inventories $99M (+55% YoY) to reflect decision to build inventories in response to strong consumer demand ahead of holiday season and longer ocean shipping lead times; sees FY revenue $270M-$272M vs est. $271.6M

·     Build-a-Bear Workshop (BBW) declared a special $1.25 cash dividend payable Dec. 27 to shareholders of record as of Dec. 10, authorized a share buyback of up to $25M, and appointed Narayan Iyengar and Lesli Rotenberg to its Board of Directors

·     Ethan Allen (ETD) raised its quarterly dividend to 29c/share from 25c

·     Li Auto (LI) delivered 13,485 Li ONEs in November 2021, up 190.2% Y/Y and an increase of 76.3% M/M from October’s 7,649 deliveries; total deliveries for the eleven months ended November 30, 2021 reached 76,404, taking cumulative deliveries to 110,001.

·     Nio (NIO) delivered 10,878 vehicles in November, up 105.6% from a year earlier; delivered 80,940 vehicles year to date, a rise of 120.4% from the same period last year

·     Xpeng (XPEV) says delivered 15,613 vehicles in Nov, up 270% from a year ago; says 82,155 total vehicles delivered YTD, up 285% YoY; says deliveries in Nov consisted of 7,839 P7 smart sports sedans; plans to begin deliveries of its new flagship smart SUV G9 in Q3 of 2022

·     In casinos (WYNN, MLCO, LVS): Macau’s gaming bureau reported November gross revenue from games of fortune in the region was up 0.01% year-over-year to 6.749B patacas

 

Energy

·     Cenovus Energy (CVE) agrees to sell its Husky retail fuels network and the Wembley assets in its conventional business in separate deals totaling nearly $660M; Cenovus will sell 337 gas stations in its Husky retail fuels network to Parkland Corp. for $420M, but the company will retain its commercial fuels business; will sell its primarily Montney assets in Wembley for $238M.

·     The American Petroleum Institute (API) reportedly a weekly draw of 747K barrels of oil for the week ending November 26; showed a build of 2.2M barrels, distillate inventories show a build of 800K barrels and Cushing inventories show a build of 1M barrels

 

Financials

·     Royal Bank of Canada (RY) raised the quarterly dividend by 11% to 1.20 Canadian dollars (94 U.S. cents) from C$1.08 and unveiled plans to buy back up to 45 million shares; Q4 revenue C$12.38B vs. C$11.09B a year ago and qtrly provision for credit losses was a benefit of c$227 mln vs loss of c$427 mln

·     Mastercard (MA) announced an $8B share buyback and raised its quarterly dividend to 49c/shr from 44c

·     Fair Isaac (FICO) authorized a new $500M share buyback authorization

·     ACI Worldwide (ACIW) has extended its partnership with PayPoint to drive modernization of its payments business

 

Healthcare

·     U.S. FDA advisers vote to recommend authorization of Merck’s (MRK) oral pill for treatment of mild-to-moderate covid-19 in adults at high risk of progressing to severe disease

·     Sage Therapeutics (SAGE) and Biogen (BIIB) announced 12-month data for the cohort of patients who received zuranolone 50 mg once nightly for 14-days as their initial dose in the ongoing Phase 3 open-label SHORELINE Study and had the opportunity to be followed for 12-months.

·     ImmunoGen (IMGN) announced a $175M offering

·     Krystal Biotech (KRYS) 2.67M share Secondary priced at $75.00

 

Industrials & Materials

·     Donaldson (DCI) Q1 EPS $0.61 vs. est. $0.55; Q1 revs $760.9M vs. est. $745.38M; is increasing its fiscal 2022 sales and EPS guidance to reflect better than expected sales in Q1, combined with the anticipated incremental impact of additional price increases planned for the remainder of the year; raises FY22 GAAP EPS view to $2.57-$2.73 from $2.50-$2.66

·     EMCORE (EMKR) Q4 adj EPS $0.17 vs est. $0.20 on revenue $44M vs est. $43.2M, guides Q1 revenue to $41M-$43M vs est. $43.5M

·     Landstar System (LSTR) raised Q4 forecast for EPS to $2.83-$2.93 from $2.55-$2.65 and revenue to $1.85B-$1.9B from $1.7B-$1.75B

·     Embraer (ERJ) shareholders approved a partial spin-off of Yabora

·     Rush Enterprises (RUSHA) receives Board approval to repurchase up to $100M of its shares in new buyback program.

 

Technology, Media & Telecom

·     Salesforce (CRM) 3Q adj EPS $1.27 vs est. $0.92 on revs $6.86B vs est. $6.8B, sees 4Q revs $7.224-7.234B vs est. $7.23B, sees 1Q23 revs $7.215-7.25B vs est. $7.36B and FY23 revs $31.7-31.8B vs est. $31.8B

·     Ambarella (AMBA) 3Q adj EPS $0.57 vs est. $0.49 on revs $92.2Mm vs est. $90.35Mm; guides 4Q revs $88.5-91.5Mm vs est. $88.2Mm

·     Zscaler (ZS) 1Q adj EPS $0.14 vs est. $0.12 on revs $230.5Mm vs est. $208.4Mm; guides 2Q adj EPS about $0.11 vs est. $0.12, sees 2Q revs $240-242Mm vs est. $221.2Mm; guides FY22 adj EPS $0.50-0.52 vs est. $0.56, sees FY revs $1.0-1.01B vs est. $941.6B

·     GlobalFoundries (GFS) 3Q adj EPS $0.07 vs est. $0.00 on revs $1.7B vs est. $1.7B; guides 4Q adj EPS $0.09-0.13 vs est. $0.09, sees 4Q revs $1.8-1.83B vs est. $1.8B and gr profit $335-350Mm vs est. $323.6Mm

·     NetApp (NTAP) 2Q adj EPS $1.28 vs est. $1.21 on revs $1.57B vs est. $1.549B; guides 3Q adj EPS $1.21-1.31 vs est. $1.29 and revs $1.525-1.675B vs est. $1.592B; sees FY adj EPS $4.90-5.10 vs est. $5.01 and revs $+9-10% vs est. +9%, also sees FY adj gr margin about 68% and adj op margin 23-24%

·     Hewlett Packard Enterprise (HPE) 4Q adj EPS $0.52 vs est. $0.48 on revs $7.4B vs est. $7.38B; guides 1Q adj EPS $0.42-0.50 vs est. $0.49, sees FY adj EPS $1.96-2.10 vs est. $2.03

·     Box Inc (BOX) 3Q adj EPS $0.22 vs est. $0.21 on revs $224Mm vs est. $218.5Mm; guides 4Q revs $227-229Mm vs est. $222.9Mm, sees FY revs $868-870Mm vs est. $858.5Mm and adj EPS $0.83-0.84 vs est. $0.81; announces new $200Mm expansion of stock repurchase program

·     Arteris (AIP) 3Q adj EPS ($0.21) vs est. ($0.27) on revs $9.0Mm vs est. $9.1Mm; guides FY revs $36.3-37.5Mm vs est. $36.8Mm

·     Altimeter Growth Corp (AGC) shareholders approved the previously announced business combination with Grab, Southeast Asia’s leading SuperApp